Education Budget

A centerpiece of President Obama's early education plan -- the Early Learning Challenge Fund -- just got its ticket to ride in a sweeping student aid bill introduced today by House Education and Labor Chairman George Miller.

The primary purpose of the Student Aid and Financial Responsibility Act (SAFRA) is to reform federal programs that provide subsidized loans for college students. The proposed reforms would create some $87 billion in taxpayer savings. Miller's legislation would capture a portion of those savings -- $10 billion over 10 years -- to fund Early Learning Challenge Grants. (Here's the full text of the legislation.)

The details of the program are similar to what the administration outlined in its fiscal year 2010 budget proposal. A key difference is that SAFRA would provide $1 billion in mandatory funding for early childhood programs each year over the next 10 years, rather than the $300 million in discretionary spending the Obama administration initially sought for 2010.

A summary of the bill posted online earlier today says that to win these grants, states would need to commit to build comprehensive early childhood systems that include:

As states have been submitting their State Fiscal Stabilization Fund (SFSF) applications, questions have arisen regarding Maintenance of Effort (MOE) provisions. In order to receive SFSF monies, states must maintain fiscal year 2006 spending levels in 2009, 2010, and 2011 for both K-12 and public institutions of higher education, or apply for a waiver. Recent guidance from the Department of Education (ED) provides insight into what the MOE provision actually means for state spending and how states can apply for waivers if necessary.

According to the American Recovery and Reinvestment Act (ARRA) legislation, states must satisfy the MOE for state spending on K-12 and higher education separately. This means that states cannot combine all state education spending into one lump sum that must be maintained in each year. Instead, they must ensure that K-12 and higher education receive at least a minimum level of funding individually.

The Department of Education recently approved the State Fiscal Stabilization Fund (SFSF) applications of five more states - Alaska, Nebraska, North Dakota, New Mexico, and New Hampshire. These states join the 31 states/territories that have already begun to receive funds. As of June 26th, nearly $6.2 billion in SFSF monies have been disbursed to states. (Previous posts analyzing the applications of the first 31 states/territories can be found here, here, here, here, and here.)

The full table of all 31 states/territories can be access here.

Something funny is happening in Pennsylvania. Last Friday, Pennsylvania Governor Ed Rendell submitted the state's State Fiscal Stabilization Fund (SFSF) application to the U.S. Department of Education. Although the application allocates funds to K-12 education, community colleges, a college of technology, and the state university system, it purposely leaves out the state's four "state-related universities."  These four institutions - Pennsylvania State University, University of Pittsburgh, Temple University, and Lincoln University - expected to receive more than $41.9 million under the state's original SFSF application.

The governor justifies the controversial move claiming that the four institutions are not under the "absolute control of the Commonwealth," meaning that he has no influence over how they allocate funds or set tuition levels. Similarly, the institutions do not receive funds from the state university system. Instead, they are funded via a "non-preferred appropriation," also referred to as "an appropriation to any charitable or educational institution." However, these funds are allocated through the General Fund Budget, just like funding for the state's Thaddeus Stevens College of Technology, which remains in the SFSF application. But this change may violate SFSF guidance which requires states to distribute SFSF monies to K-12 and higher education according to their share of the state's budget deficit.

Last week Education Secretary Duncan announced that $350 million of the $4.35 billion in Race to the Top funds for states will be dedicated to competitive grants to help states improve assessments of student achievement. This announcement was well timed with a forum held by the National Governors Association and the Council of Chief State School Officers (NGA/CCSSO) to introduce their Common Core State Standards Initiative. Combined, these two efforts could mean a significant change in both the expectations students are held to and the way in which their performance is measured.

The NGA/CCSSO Common Core State Standards Initiative represents a major step towards national standards for college readiness and student achievement in math and English-Language Arts. By signing on to the initiative, states are agreeing to participate in the creation of internationally benchmarked standards that they can then choose to adopt within three years. These standards aim to be clearer and more concise than existing state standards and should guarantee that students across the country are learning the same thing and are held to similar standards.

Every year the federal government provides billions of dollars worth of grants, loans, and other forms of assistance through mandatory funding to students pursuing a postsecondary education. Yet, according to the president's 2010 budget request, total mandatory funding (funding not provided through the appropriations process) for education programs in 2009 is negative $20.3 billion. Although a negative funding level is counterintuitive, it can be explained by the budgeting methods required for federal student loan programs.

The way the federal government reports the costs of new student loans makes up part of the negative 2009 funding figure. Most spending in the federal budget is accounted for on a cash basis -- that is, money appears in the budget as it is made available and spent. Loan program costs, however, are presented as the subsidy conferred by the federal government to borrowers and private lenders administering the loans. Even though the federal subsidy will be conferred to borrowers and lenders over the life of the loan, its total value shows up in the budget all at once, in the year the loan is made.

At Ed Money Watch, we discuss and analyze major issues affecting education funding. In our Friday News Roundup, we try to highlight interesting stories that might otherwise get overlooked. These stories emphasize how federal and state policy changes can affect local schools and districts.

Connecticut Student Loan Foundation Cannot Make New Loans

North Carolina Governor Proposes $1.5 Billion Tax Hike

In Hawaii, Governor Proposes Cuts to Education, Suggests Volunteerism

Oregon Governor Threatens to Veto Measure to Guarantee Reserve Money to Schools

The Department of Education recently approved the State Fiscal Stabilization Fund (SFSF) applications of five more states - Arizona, Colorado, Connecticut, New Jersey, and Ohio - the District of Columbia. These states join the 26 states/territories that have already begun to receive funds. As of June 12th, nearly $3.9 billion in SFSF monies have been disbursed to states. (Previous posts analyzing the applications of the first 26 states/territories can be found here, here, here, and here.)

Two weeks ago, our sister blog Higher Ed Watch published a post uncovering the truth behind Kentucky's terminated teacher loan forgiveness program, "Best in Class." Although the Kentucky Higher Education Student Loan Corporation (KHESLC), the state's nonprofit student loan agency that administered the program, blamed federal subsidy cuts for the program's demise, Higher Ed Watch showed that the agency had engaged in questionable practices to collect these subsidies. Now, many Kentucky teachers enrolled in the program are in a financial bind and many stated their outrage in comments on the blog. One commenter suggested Kentucky use it's State Fiscal Stabilization Fund (SFSF) under the 2009 economic stimulus law to fund the program. Unfortunately, the structure of the SFSF makes this very unlikely.

The following op-ed originally appeared in U.S. News & World Report on Friday, June 12^th and can be accessed here. The full report, Equitable Resources in Low Income Schools: Teacher Equity and the Federal Title I Comparability Requirement, can be read here.

Imagine for a moment that you are driving your child to the hospital. She has a high fever and is suffering from severe abdominal pain. It's unclear what's wrong but she is in definite need of medical attention.

Now imagine that the only doctor on call is a recently graduated medical student. It's her first day on the job and there is no experienced physician or surgeon available for consultation. Are you satisfied with this level of care for your child? I wouldn't be. I'd want to benefit from the knowledge of a more experienced physician. Wouldn't you?

Unfortunately, a similar scenario is playing out in America's urban classrooms with shocking regularity. Teachers with the least experience are educating the most disadvantaged students in the highest poverty, most challenging schools. Low-income kids are being "triaged" not by experienced teachers, but by those with fewer than three years of teaching to go on.